Wage Arrears in Russia Surge as Companies Struggle
Wage arrears in Russia have surged by a staggering 43.5% in 2024, highlighting the difficult business environment companies are facing. This surge comes as a result of the Central Bank's sudden interest rate hike to a record high of 21% last autumn, a move prompted by spiralling inflation. With the possibility of another rate rise looming in the first quarter of 2025, companies with large debt exposure are struggling to stay afloat and repay their loans.
The impact on workers is significant, with long delays in getting paid becoming increasingly common. As of January 1, 2025, Russian companies' debt to their employees totalled a staggering £4.2 million, a 43.5% increase year-on-year. This includes over £900,000 in accumulated debt from 2022-2023, and the remaining amount from unpaid salaries in 2024. This marks the first time wage arrears have increased in nine years.
The construction industry has been hit the hardest, accounting for half of the wage arrears. This is due to a steep decline in new mortgage approvals and high interest rates. The manufacturing industry is also struggling, with 20% of arrears concentrated there as firms face difficulties accessing credit.
This situation echoes the challenges faced in 2015, when business debts to workers exploded by 75% to £29 million following the imposition of sanctions and the collapse of oil prices. The current economic climate, coupled with the high interest rates, is creating a difficult environment for both businesses and their employees.
12 Comments
Fuerza
“Workers deserve better, and this piece makes it clear that both industries and policymakers need to act quickly.”
Manolo Noriega
“This narrative only works if you ignore positive steps taken by many employers to support their staff despite economic pressures.”
Fuerza
“The numbers don’t lie—this is a wake-up call for both the government and businesses to address financial mismanagement.”
Ongania
“Supporting this narrative because it calls for accountability from companies that are neglecting their worker’s pay.”
Fuerza
“I appreciate that the text doesn’t shy away from the harsh truths of the current economic environment.”
Noir Black
“It’s unfair to lump all company debts into a single figure. Many businesses are struggling but still paying their employees on time.”
BuggaBoom
“The focus on the construction industry is spot on—when mortgages and credit dry up, the most vulnerable sectors suffer.”
Katchuka
“Using outdated figures and historic comparisons makes the whole article look like fear-mongering rather than a genuine analysis.”
Eugene Alta
“The detailed breakdown between construction and manufacturing shows the article is based on real data, not just opinions.”
KittyKat
“The focus on mortgage approvals in the construction industry seems like a diversion. There are many reasons for industry struggles that aren’t addressed here.”
Loubianka
“The language used is alarmist. With responsible financial management, companies can overcome temporary setbacks.”
Eugene Alta
“Finally, someone shedding light on the real struggles companies are facing! Wage arrears up by 43.5% is alarming.”